Taxes, Debt and the Fiscal Cliff

Nov 20, 2012

RUSH: Rick in Los Angeles. I’m glad you called, sir, and it’s great to have you here. Hi.

CALLER: Hello, Rush. Thank you for having me.

RUSH: You bet.

CALLER: I’m hoping you could help me out with something. I’m confused about something, and I figured you’re the only guy that could help me out. So it’s a question regarding the grand bargain and budget negotiating. I kind of understand baseline budgeting, we have a baseline, and we’re projected to go a certain distance out into ten years, and we have a deficit. And as part of that baseline, taxes on December 31st are going up for everybody, so that’s already in the books, it’s already in the budget. I hear a lot of talk about raising taxes for the wealthy on December 31st, but that’s really not what’s happening. What’s happening on December 31st, if it doesn’t go up for everybody, what the Democrats and the president want to do is reduce taxes for those people making under $250,000. The problem I have is I always thought that the Democrats and the president said if you’re gonna reduce taxes, you have to pay for it. Have they proposed how they’re gonna pay for that tax decrease?

RUSH: Well, yes. The taxes on the rich and the elimination of loopholes and deductions for the rich is how they’re gonna pay for all that. But, look, you know, you’re on to a couple things here. As far as most people are concerned, and I really believe this is true — I saw some exit polling data. Do you realize — I gotta find it. I don’t want to paraphrase it, but on one level it’s stunning and shocking, and then when you stop and think about it, it isn’t really. But the vast majority of people who voted think the Democrat Party is the party of lower taxes. It’s not even close. The Republicans have lost that issue entirely, according to exit polling and other data as well.

The Bush tax rates are portrayed by Obama and the Democrats as only benefiting the rich. The Bush tax rates — this why there’s a part of me that says, go ahead and let ’em do what they want to do and let’s illustrate, let’s have everybody’s taxes go up, as you say. With the Bush tax cuts expiring, everybody’s taxes are going up. Everybody’s taxes are going up anyway no matter what deal is made because of Obamacare alone. Everybody’s taxes are gonna be skyrocketing no matter what deal is done. But this notion of paying for the tax cuts doesn’t apply to Democrats, is the answer to your question.

CALLER: Yes, because the tax cuts to the rich, you’re saying that’s how they’re gonna pay for it. That’s already in the baseline budgeting. All taxes are going up. They’re going from 36 to thirty-nine point whatever percent. That’s already in the baseline.

RUSH: Yes, but there’s also —

CALLER: If you reduce taxes —

RUSH: The capital gains rate is going up. There’s other taxes that only supposedly affect the rich.

CALLER: But that’s already in the baseline. That’s already in there.

RUSH: No, that’s technically not in the baseline. I know what you’re trying to say. What you’re trying to say is that the budgetary effect of the Bush tax rates expiring has already been calculated, it’s already known. And so whatever they say about it is smoke and mirrors, right? That’s essentially what you’re saying.

CALLER: That’s right. If you’re gonna lower taxes for anybody, you have to increase taxes somewhere else, over and above the Bush tax rates. That’s already in the numbers. If you’re gonna reduce taxes on 250 and under, you have to propose a budget cut somewhere to pay for that, or even more taxes, more than the capital gains rate going to 20%, more than the tax rate going to 39.6.

RUSH: Are you being facetious here, or do you really believe what you’re saying here? Do you believe this “pay for it” jargon that you’re using?

CALLER: Oh, I absolutely believe that lowering taxes creates growth. I’m using their argument against them.

RUSH: Because there’s no such thing as paying for a tax —

CALLER: Of course not.

RUSH: If we don’t dispatch with that line of thinking. If we don’t get rid of this notion we have to pay for tax cuts because underlying that is that the government is automatically entitled to every dollar that is produced, earned, created in the country. The idea that tax cuts have to be paid for, by definition, the government’s entitled to every dollar, and we’ve got to get rid of this way of thinking. So I’m asking if you’re doing this sarcastically.

CALLER: But that’s exactly my point. You can use this against the Democrats. What the Democrats are saying is the reason why they want to lower taxes on the middle class is because it’s helpful for the economy, and they’re not proposing to pay for it. So aren’t they acknowledging that lowering taxes and not paying for it is a good thing?

RUSH: Well, no. No. I know what you’re trying to conclude here. You’re trying to catch them in something. But they’re not gonna be caught. The Republicans are not going to catch them in anything. The Republicans are going to go along, I fear. Maybe not. We’ll see. I appreciate the call.

BREAK TRANSCRIPT

RUSH: Okay, very simply, fiscal cliff. I believe, if we’re gonna raise anybody’s taxes, then you ought to raise everybody’s. Raise everybody’s, not just the rich, raise everybody’s taxes. Let’s be fair. But I don’t think taxes are the reason we’re in this mess. We’re not gonna solve this mess ’til we start cutting spending. And I think everybody’s taxes ought to be lowered, to tell you the truth, and the government ought to cut spending.

BREAK TRANSCRIPT

RUSH: Okay, the fiscal cliff, the budget deal to save the nation and all this stuff. I don’t think it’s very complicated. Where we’re headed is very obvious. What we have to do to fix it is very obvious. And what’s also very obvious is that nobody wants to actually deal with it. They want to paper it over, cosmetically approach it, kick the can down the road for as long as they can with Band-Aids. But the problem is very simple. We are spending way more money, combination spending and borrowing, than we have, than we are producing. It’s not even close. It’s utterly irresponsible what has happened to this country, and we’re on a path of financial collapse. We’re on the path to financial ruin. We have spending commitments that we cannot possibly pay for, no matter what we do.

There is no amount of money that can be raised via tax increases that does not destroy the economy that can solve the problem. There simply isn’t. You can’t raise taxes on people enough to fix this and still leave people with enough disposable income to live. You just can’t, at which point Obama says, “That’s okay with me, I’ll print more money. I’ll borrow more money from the ChiComs, or whatever. I’ll be glad to provide people with a subsistence, as long as they realize it’s coming from me. I’ll be happy to be Santa Claus.” In fact, if you’re Obama, you think the country deserves this because you think the country’s been unjust and immoral from its founding days.

If you’re Obama, you believe, you’ve been taught, that the country was founded by and for a small bunch of rich white guys and that they have maintained control over the country ever since was founded, and in order to get rich, they stole from everybody. They stole from minorities in this country. They stole from poor countries around the world. It’s time we pay the piper, if you’re Obama. So all this chaos is fine. If you’re anti-capitalist, which Obama is, it’s much easier to attack capitalism when you’ve driven the unemployment rate up to eight, nine, 10%. You got real pain, people can’t find jobs, which means they can’t find income, which means they can’t support themselves, which means they can’t live.

That situation is made to order for you. You come in as Santa Claus, whatever you want to call it, and you make sure that the circumstances that exist are not that painful for people that don’t have jobs. And while you do this, you illustrate, guess where your real security is? It’s not in your life, it’s not with your hard work, your real security and prosperity does not reside in you; it’s with your government. Your government is here to save the day for you, right? When you get in trouble, is it Mitt Romney helping you out, is it Rush Limbaugh helping you out, or is it your government led by me? What’s not stated is that you need your government’s help because this administration has, with policies, created this circumstance, where even if you want to work there aren’t any jobs.

Have you seen the layoffs that are taking place? They continue. Have you seen the unions? The unions are now promising to disrupt Walmart, LAX, Hostess, wherever. They won the election and they’re madder than ever. They won the election and they’re angrier than ever. They won the election, and they’re still not satisfied. They are still targeting the private sector institutions of this country that they claim have been unjust and unfair. They’re on the march. There’s no stopping them. Rand Paul, Kentucky, is thinking of throwing his hat in the presidential ring. One of his stated planks, liberalizing marijuana laws. Well, that’s a way to go get the young people, and maybe relax the border and immigration. And not just him, by the way.

I mean, the whole Republican Party right now seems oriented toward getting in on this giveaway game. But the game exists because policies created by actual politicians over the years have led us to where we are. And, quite simply, the rich do not have enough money to tax them and fix the problem. In fact, you could take everything the rich have. Let’s say leave ’em a hundred thousand dollars, just to be fair. Don’t care how much, just take it all. You know how long you could run the government? Maybe at the outside, six weeks. But you see, you can only do that once. You take away Warren Buffett’s $40 billion, he’s not gonna have 40 billion new dollars next year to take away. It’s gone.

So that’s clearly not the answer. But the politics of that is is an interesting bit of data here that has been put out by a group called Just Facts Daily, and the guy sent my brother this news, he passed it on at me. The website is Just Facts Daily, and I don’t know exactly what they do, but they did some preelection polling. And one of the polls that they commissioned preelection found the following.

“Ninety percent of people who are planning to vote for Barack Obama falsely believe that the middle class pays a greater portion of their income in federal taxes than the upper 1% of income earners.” Now, we’re not talking about dollars, we’re talking rates. Ninety percent of the people — you talk about losing an issue and losing an argument. And we know exactly how this happened. The Buffett Rule. You got Warren Buffett running around lamenting this BS, that his secretary pays a higher tax rate than he does and how unjust and unfair and immoral that is, and then Obama cites it every day for two years, and then you get the all reliable Bill Gates saying something similar, and then you have a bunch of other rich guys chime in, say the same thing. And it doesn’t take long before people actually start believing that the rich are paying a lower tax rate, never mind the fact that the top 1% of taxpayers pays 40% of all federal income taxes and climbing, top 1% pays 40% of everything.

The top 10% pay close to 80% of everything. The bottom 50% pay nothing, in the federal income tax burden. And yet, Obama and the Democrats have succeeded in convincing 90% of the people who voted for ’em that the middle class are paying a higher tax rate, a percentage, than the rich. Of course, even if it were true, it’s irrelevant, but it isn’t true. What it ends up really meaning to people, the middle class are paying for these rich guys, the rich guys aren’t paying anything. That’s how it manifests itself. And when you have a president willing to exploit this in the class envy arena, then you get an election return like we got, and you have a call for even more taxes on the rich because they still aren’t paying their fair share, which Obama is actually saying.

The fact of the matter is there are fewer and fewer taxpayers in this country, fewer and fewer people are actually paying for whatever spending is taking place. The burden of this government, the burden of this nation is falling on fewer and fewer people. And those are the people who work. So any budget deal that calls for further tax increases on these people — sorry, I told you I got a note earlier today, and one of these Politico early morning stories where they bullet-point things that are gonna be happening today, or did happen yesterday, the agenda type stories, Hotline kind of stuff.

A friend of mine sends me a note that says, “Look, Rush, there’s gonna be some pressure brought to bear here to drive a wedge between you and Grover Norquist.” Grover Norquist, Americans for Tax Reform, has this anti-tax increase pledge that he requires every Republican to sign, or he pressures them to sign, and many do. And they’re hoping — “they,” the proverbial media-Democrat complex — that I will come along and echo Bill Kristol and say, “You know what, I think everybody needs to pitch in. The rich shouldn’t complain about a couple, three, additional percentage points on their taxes.” And, in the process, they’re hoping that I can undercut Grover Norquist. I don’t know what they’re thinking, but I steadfastly oppose tax increases on just one group of Americans.

If we’re gonna raise taxes, we’re gonna do it on everybody. That, to me, is fairness. But I don’t think anybody’s taxes ought to be raised because I’ll tell you, I’m offended, I’m offended listening to the people who are responsible for this blame the American people because they’re not paying enough in taxes for the problem. That’s not our problem. Our problem is a spending problem, first, second, third, fourth, fifth, and sixth on down to number ten. We are in this mess because of an unchecked, irresponsible, undisciplined spending problem.

Now, some people might say, “But, Rush, yes, these politicians are spending, but they’re spending on what people want.” And, yes, which is why I said after the election, “It’s tough to beat Santa Claus.” So you might say, okay, some of the tax consumers are also responsible for the mess. When we have a problem that is this egregious, this potentially destructive, it insults my sensibilities and my intelligence to hear that the people responsible for this are taxpayers who aren’t paying enough. I don’t know about you, but I don’t have any control over what is spent in this country. Zilch, zero, nada. All I can tell you is that a bunch of irresponsible people for years and decades have been spending far more than we have, they’ve been spending like it doesn’t matter, and that has caused this problem. There’s no amount of revenue increasing, no amount of revenue enhancement, no amount of revenue increases that is gonna make a dent in this.

The people that want to raise taxes want to do so because they want to take away wealth, more wealth from more people and transfer it to the government. They are only interested in the government getting bigger. They are not interested in real revenue creation. Raising taxes is not the way to do it, particularly in this economy. Raising taxes is going to lower the amount of revenue created and generated to Washington because it’s gonna result in even fewer people working, which means fewer people paying taxes, whatever their income tax rate is.

Mathematics is mathematics. The more people paying taxes, the more revenue will go to Washington, and the people who claim that’s what they want, revenue in Washington, then ought to be oriented primarily around creating jobs, quickly and expansively. The fastest way to generate revenue in Washington is create jobs, more taxpayers paying more taxes. Not higher taxes, just more people paying taxes. On the same token, the more people who lose their jobs, ergo, the more people who are not working. If they’re not working, they’re not earning money, and if they’re not earning money, they’re not paying taxes.

Now, I’m walking you through this ’cause everybody said Mitt did not explain what he meant when he was talking about it. Well, I’m doing it from the rudimentary level. The Obama plan that’s being worked on now is going to result in fewer taxpayers. It’s going to result in more unemployment. More unemployment equals fewer taxpayers, equals less revenue to Washington. But the rich are gonna have their taxes raised so the rich are going to have money taken away from them. It isn’t going to make a dent in the deficit or the national debt or the spending projections. All it’s gonna do is penalize the rich because they’re the ones that happen to have the money now.

But it isn’t going to even take a baby step toward solving the problem. And it won’t be solved, and there will not be any serious steps taken to solve this problem unless the first thing everybody’s talking about is cutting spending. And I don’t care where. There is not a way of doing this that is painless. And the Democrats have created this impression in their voters’ minds that it can be painless and that the only people that will cause economic hardship or pain are the Republicans. But given where we are now, there is no way to escape hardship if we fix the problem. If we don’t fix it, if we just paper it over with all this silly talk about raising taxes on the rich, we’re just kicking the can down the road. The problem explodes later, gets worse and worse, no new jobs are created, nothing like this happens, there isn’t any newfound security. We just delay the inevitable.

Then you get to the real moment of spending cuts. Well, when you start cutting spending in this country, when you realize that over half the American people get a government check of some kind every week, yep, some people are gonna end up with less money, maybe unemployment benefits, I don’t know what, but it’s not gonna be pretty. There will be protests, and there will be riots, and this is what everybody wants to avoid, create a picture where this need not happen, it doesn’t have to happen. If we just raise taxes on the rich, everything will be okay, and it won’t be.

CALLER: Howdy, Rush. Mega red state dittos from deep in Sheila Jackson Lee’s district. I’m a excise tax, fuel tax and sales tax expert in the oil and gas business, and there’s a direct correlation between the sophistication of a state’s tax code and how dysfunctional a state’s budget is, and in particular Illinois, New York, and California. In Illinois, to borrow a movie, the Blues Brothers, the Cook County tax collector, where is our president from? Cook County. And so I think probably something that maybe your listeners probably haven’t thought about is the paradigm that he comes from, in that they just tax anything that moves. And so he’s trying to basically take that tax philosophy of Cook County, Illinois, and just spread it across the United States.

RUSH: Right.

CALLER: And also I think there might be kind of a subliminal, I don’t know, maybe a new Marxism going on through the tax code, controlling consumption, controlling behavior through taxation. It’s incredulous —

RUSH: They’re gonna use health care for that. Health care, death panels, health care taxes. Actually, the apportionment of actual health care, not coverage or insurance, but they will control behavior by virtue of who gets health care and who pays what for insurance and all that. But, anyway, I gotta take a break here. Sorry for the lack of time you had, Matt, but I appreciate it.